montalbano, pietrelli, salvatici trade policy and ... · 1. outline aim economics of maize in...

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Montalbano, Pietrelli, Salvatici Trade policy and household food security 1 / 21

1.

Outline

Aim

Economics of maize in Uganda

Contribution

Data

Descriptive analysis

Next step: identification strategy


2. Aim

Research question

Empirical test whether there is heterogeneity in household food securityaccording to household exposure to trade and to the value chain.Uganda is an ideal candidate:

food security is a priority for the country’s development agenda(WFP, 2009);

the maize value chain has been extensively studied (ICG 2003,USAID, 2009);

there is a panel data of households covering the period 2009-12.


3. Economics of maize in Uganda

Figure: Maize production and export of Uganda (2005-2011)

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2005 2006 2007 2008 2009 2010 2011

Production (MT) Maize Export (tonnes) Maize flour Export (tonnes)

Source: FAOSTAT, 2014



Trade measures on maize by Uganda and main EA partners

2008/09:

Ban on maize exports and zero import duty policy for maize byTanzania and Kenya.Uganda banned exports of maize and other cereals.

2010/11:

Kenya applied a 50% import tariff on maize for countries non-EAC.The EA Common Market Protocol has come into effect betweenKenya, Tanzania, Uganda, Rwanda and Burundi.Kenya allowed duty free maize import from outside the EAC.

2012:

Uganda joined the COMESA Free Trade Area.

Source: FAPDA-FAO, 2014



Indicators of trade distorsion on maize, Uganda(2008,2011)

Table: Nominal Rate of Protection, maize

MAFAP IndicatorsYear NRP(c) NRP(fg)2008 60.006 29.8962009 26.676 32.2192010 28.903 32.8092011 -11.884 61.271

Souce: MAFAP-FAO, 2014



Maize Value Chain & Key Players

The 4 main transactions of the maize VC in Uganda are:

export marketLarge-scale Traders / Exporters

from urban market to buying centres outside the districtsProcessors/Millers

from rural market to urban marketsUrban traders

from farm gate to traders in rural marketsRural Agents

Source: USAID, 2010


4. Contribution

What do we do?

We extend the analysis on trade and poverty, vulnerability (Niimi etal.,2007; Balat et al.,2009; Magrini and Montalbano, 2012) usinghousehold surveys to trade and food security.

We overcome the dichotomous approach of Balat et al. (2009) bylooking at maize as both export and food crop.

We propose to move from trade exposure to value chain exposure:we differentiate the hhs according to their access to levels of themaize value chain, as proxy of different degree of trade exposure.


4. Contribution

From trade exposure to value chain exposure

The household survey allows us to investigate in detail thecharacteristics of small-holder farmers, the key player of the maize VC.

Fact: The family farmers sell maize to different partners: neighborsand relatives, consumers, local trader, district traders.

Our assumption: shock heterogeneity between hhs with different VCexposure (through different commercial partners) is a proxy of shockheterogeneity along the VC.

Our strategy: to cluster hhs according to their different VC partners,namely to their VC exposure and test heterogeneity in food securityamong clusters.


4. Contribution

From trade exposure to value chain exposure (2)

District

trader

Local trader

Local

consumers

Export market

District

trader

Local trader

Local

consumers

Export market

Processors

Processors

Farmers with

different

localization

and farming

characteristics

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D

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E

X

P

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S

U

R

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VALUE CHAIN EXPOSURE

EXPOSURE


5. Data

Uganda Living Standards Measurement Study - IntegratedSurvey on Agriculture (LSMS-ISA)

The survey sample includes approximately 3,000 Ugandan and isrepresentative at national and regional level.

The households are visited three times between 2009 and 2012.

The main advantage of the survey is the presence of an extendedAgricultural Questionnaire, which includes detailed informations onhousehold farming practices.

The variables for use of inputs and production are replicated for 2maize season - to control for seasonality in unimodal/bimodal regions;Different combinations of crop conditions (wet or dry) and state (inshell, without shell, with stalk, without stalk, in cob/head) - conversionfactor to Kg.


6. Descriptive analysis

Household clusters

Tot hhs sample:

2,975

Agri hhs:

2,346

Agri hhs producing maize:

1,679

Net Consumer:

984

Hh is a net producer whether sells any

quantity of maize in the first or second

crop season.

By using a Index: use of fertiliser; use of

pesticides, purchase seeds, hire labour, maize

acreage, quantity of maize harvested (USAID,

2010).

Net Producer:

695

Subsistence:

185

Commercial:

510

2nd chain ring:

427

1st chain ring:

83

1st chain ring if the main partner of the hh is a private

trader in district market; 2nd chain ring if the main

partner is the private trader in the local market/village.



Some details on household clusters

We have tried different strategies in order to cluster commercial vssubsistence hhs, hhs with first vs second ring access:

only questionnaire’s answer on “main commercial partner”:

private trader in local market;private trader in district market;consumer at market;neighbor/relative

Issues: many partners, potential bias due to collection errors.

Combination of:

literature (on differences between commercial and subsistence farmers)statistical approach to put together different characteristicsquestionnaire’s answers.



Some details on household clusters (2)

Dummies: purchseed 1s fert 1s pest 1s acre 1s (>0.3) sold 1s(>600kg) hirlab 1s purchseed 2spest 2s fert 2s acre 2s(>0.3) sold 2s(>600kg) hirlab 2s

Index = averages of factors weighted by variances.Commercial if index >median (sensitivity on threshold).



Household heterogeneity in farming characteristics

Table: Heterogeneity by maize net producer and net consumer

MAIZE Net Producer (695) vs Net Consumer (984)Mean diff t-test Anova K-S

Use of fertiliser for maize -0.016 * * *Purchase seeds for maize -0.027 * * *Hire labour -0.190 *** *** ***Transport costs (USh) -1095.324 ** ** ***Maize production (Kg) -1446.156 *** *** ***Maize sale (Kg) -1044.272 *** *** ***



Household heterogeneity in farming characteristics (2)

Table: Heterogeneity by commercial and subsistence, chain levels

MAIZE Commercial (510) vs Subsistence (185) Second Chain (83) vs First Chain (427)Mean difference t-test Anova K-S Mean difference t-test Anova K-S

Use of fertiliser for maize -0.028 * * * 0.038Purchase seeds for maize -0.108 ** ** ** -0.138 * *Hire labour 0.055 -0.132Transport costs (USh) -1477.130 ** ** -2440.054Maize production (Kg) -1436.703 * * ** -4214.595 * * *Maize sale (Kg) -822.569 * * ** -2461.242 ** ** **

ALL CROPS Second Chain (158) vs First Chain (705)Mean difference t-test Anova K-S

Use of fertiliser -0.085 * * *Purchase seeds -0.073 * * *Hire labour -0.073 *** *** **Transport costs (USh) -5728.557 ** ** **Crops production (Kg) -2282.886 * * ***Crops sale (Kg) -2966.785 *** *** ***



Household heterogeneity in food security

Table: Heterogeneity in food security by maize net producer and net consumer

MAIZE Net Producer (695) vs Net Consumer (984)Mean diff t-test Anova K-S

Availability log(cons) -0.091 ** ** **Access N. meals -0.094 * * *Utilization Distance to road (km) -1.055851 ** ** **Stability No food 0.114 *** *** ***



Household heterogeneity in food security (2)

Table: Heterogeneity in food security by commercial and subsistence, chain levels

MAIZE Commercial (510) vs Subsistence (185) Second Chain (83) vs First Chain (427)Mean diff t-test Anova K-S Mean diff t-test Anova K-S

Availability log(cons) -0.171 ** ** ** 0.035Access N. meals -0.162 ** ** * 0.077Utilization Distance to road (km) -1.356 * * * 0.810Stability No food -0.003 -0.036

ALL CROPS Second Chain (158) vs First Chain (705)Mean diff t-test Anova K-S

log(cons) -0.121 ** ** **N. meals -0.223 ** ** **Distance to road (km) 0.290No food 0.047


7. Identification strategy

Next step: identification strategy

FSh,t = φ(θh, θc , θt ,Xh)

To test the presence of heterogeneity in food security according tohousehold trade exposure we need to control for:

Selfselection into trade exposure - controlling for observablecharacteristicsHeterogeneity time invariant - exploiting the panel dimension

If we reject H(0): θc = 0, heterogeneity in VC exposure impacts onhousehold food security.


7. Identification strategy


8. References

References

Balat J., Brambilla I. and Porto, G., 2009. “Realizing the gains from trade: export crops,marketing costs and poverty”, Journal of International Economics 78, 21-31.

Independent Consulting Group, 2003. “Analysis of the maize supply chain in Uganda”,November 2003.

MAFAP-FAO, 2012. “Analysis of incentives and disincentives for maize in Uganda”,December 2009.

Niimi Y., Vasuveda-Dutta, P. and Winters L.A., 2007. “Trade liberalization and povertydynamics in Vietnam”, Journal of Economic Integration 22(4), 819-851.

Magrini E. and Montalbano P., 2012. “Trade openness and vulnerability to poverty:Vietnam in the long-run (1992-2008)”, University of Sussex WP N.35-2012.

USAID, 2010. “Market assessment and baseline study of staple foods”, Country reportUganda, March 2010.

WFP, 2009. “Comprehensive Food security and vulnerability analysis”, Country reportUganda, April 2009.


montalbano, pietrelli, salvatici trade policy and ... · 1. outline aim economics of maize in...

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